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Global pharmaceutical giant Pfizer has almost doubled its initial offer for digital healthcare business ResApp Health (ASX: RAP) to roughly $180 million, after an independent expert found the original April price significantly undervalued the company.
The initial $100 million proposal came shortly after Brisbane-based ResApp’s announced a successful pilot study of its cough-based COVID-19 detection tool in March.
The report conducted by BDO Corporate Finance determined RAP shares were worth between 14.6 cents and 27.7 cents.
The Australian arm of Pfizer has reacted by upping its offer to 20.7 cents per share, however this price is predicated on the success of ResApp’s clinical validation study due on or around 20 June.
If the results are not at or around the sensitivity and specificity levels of the pilot, then Pfizer’s offer will be at the lower end of BDO's valuation with an estimated worth of $125 million.
Shares in the med-tech business rose by 50 per cent yesterday on the back of the independent report, bucking the trend across the ASX where inflation fears led to the market closing down 3.5 per cent for the day.
Regardless of the trial's results, the ResApp board has unanimously recommended its shareholders vote in favour of the revised offer at the scheme meeting due to be held in early to mid-August.
“The ResApp board is pleased to announce the renegotiated agreement with Pfizer, which represents a material increase in the consideration to be received,” ResApp CEO and managing director Tony Keating said.
“The board believes this offer provides an attractive premium to the undisturbed ResApp share price, reduces the risk for shareholders by providing certainty through an all-cash offer, while also valuing the upside potential of these COVID-19 results.
“We believe that it represents significant value for all shareholders, and the ResApp Board strongly recommends shareholders vote in favour of the transaction in the absence of a superior proposal.”
ResApp’s machine learning algorithms use sound to diagnose and measure the severity of respiratory conditions without the need for additional accessories or hardware.
Its regulatory-approved and clinically validated products include ResAppDx, a smartphone-based acute respiratory disease diagnostic test for use in telehealth, emergency department and primary care settings; and SleepCheck, a smartphone application which allows consumers to self-assess their risk of sleep apnoea.
The share price of ResApp Health (ASX: RAP) has increased today by a further 6.06 per cent as of 11.11 AEST.
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